Life Ins W LTC

[scagnt83]

what is the inflation benefit on the MM whole life policy?

The increase is based on the Dividend Payment for the year (7.1% 2014). But it doesnt equal the actual dividend. Its approximately 2.8% annualized over 15 years based on the current dividend rate and a Standard Non-Smoker Health Rating. That number will be higher with a better rating or a lower age.

The real sweet spot for this product is age 40-60.

 

[LGilmore]

I have briefly looked at this combined product and so far the premiums have been killer in the cases I've plugged in. As I read this case I have to wonder where in America does the cost of nursing care or home health care only cost 3k per month?

In my state WA, average monthly cost according to the GW study is around 8.5k a month with about a 3% annual increase in costs.

So while I understand it's better than a poke in the eye, is 3k monthly a realistic number to present?

 

[pfg1]

I have briefly looked at this combined product and so far the premiums have been killer in the cases I've plugged in. As I read this case I have to wonder where in America does the cost of nursing care or home health care only cost 3k per month?

In my state WA, average monthly cost according to the GW study is around 8.5k a month with about a 3% annual increase in costs.

So while I understand it's better than a poke in the eye, is 3k monthly a realistic number to present?

I agree that the care will likely be more than $3k, heck probably twice that or more... but the way I'm looking at it right now is at least there is something to go towards those costs at instead of $0, should the need arise.


Tahoe Ray... I know it would be better for her to do a single prem, but she doesn't have the ability to do a lump sum.

 

[Mr_Ed]

Tahoe Ray... I know it would be better for her to do a single prem, but she doesn't have the ability to do a lump sum.

then why are you even showing her a combo product?
a traditional product will cost a fraction of any of the combo products.

 

[scagnt83]

I have briefly looked at this combined product and so far the premiums have been killer in the cases I've plugged in. As I read this case I have to wonder where in America does the cost of nursing care or home health care only cost 3k per month?

In my state WA, average monthly cost according to the GW study is around 8.5k a month with about a 3% annual increase in costs.

So while I understand it's better than a poke in the eye, is 3k monthly a realistic number to present?

Which combo product? We have covered about 5 of them in this thread...

The Mass Rider is different because you actually get a good RoR on your CV (its an LTC rider on a 10pay WL).
Its the same type of sale as most other large WL policy. "your CV grows conservatively around 2%-4% & the DB will always be more than the CV" ... you just add in "It also gives you a $3k/m LTC benefit that increases with dividends".
(keep in mind im talking about the traditional WL Rider, not their new single premium LTCI combo product that is like MG)

Also, I used $3k because the OPs prospect cant really afford much. That is the lowest benefit offered.... plus the OPs prospect is 66 years old... that makes LI expensive no matter what... especially WL.
The last case I used the Rider on the LTC benefit was $6k/m.


Also, for Nursing Home care its $8k. But for assisted living and home care its around $4k. Throw in existing sources of income, and $3k/m more than covers home care & assisted living (those are the majority of LTCI claims anyways (not discounting the need to protect for nursing care)).
(many agents forget to discount the need by existing sources of income that would be available if the client moved into assisted living)

Obviously $3k/m is not ideal. But sometimes something is better than nothing. And for someone who is "self insured" it makes a great way to leverage those dollars and grow them as well. But $3k/m is not the ideal case/client.

 

[TwiLight]

Have you ever looked at a 10pay on the TransAce? Not pretty.
No gain in CV, and around half the LTC benefit the MM Rider gives you for the same money. (by the usual ltc need age)

I don't know what you are looking at for CV, but the ROP at 33% of face max beginning in year 15, is pretty reassuring for Guaranteed cash with minimal premiums.

If the client is price sensitive which is what the OP was originally asking, this would be a good product.

 

[LGilmore]

Off the top of my head, there are only a few approved for WA sales, so you guys may have more choices.

I am a bit concerned about E&O for underselling the actual cost needs. If I were to do this, I would have the insured and family members sign off that they understand this amount won't cover much in cost for care.

From GW 2014 survey for WA state.
Homemaker annual cost 59k
HH Aide annual cost 59k
Assisted living annual cost 57k
Nursing home semi private annual cost 98.5k
Nursing home private annual cost 112k
and these are rounded down.

I just think the writing agent is taking a hell of a risk, unless this family and I mean kids too sign off that they realize this money won't completely cover cost needs.

As I said when I ran costs to meet those numbers the premiums were pretty high.

Taking a quick look at Virginia, the costs are about 80% or so of WA, but they are still up there. I would at least illustrate those costs and allow the prospect to sign off that she doesn't want them.

I see a big risk underselling the costs. But maybe that's just me.

 

[scagnt83]

I see a big risk underselling the costs. But maybe that's just me.

Do you refuse the sale of a Life Policy if the clients need is $1mill but they can only afford $500K??

What if they have sufficient assets to cover the rest? What if they can afford some but not all and that some will protect the majority of their assets?

If they can fit it into their cash flow, insuring against just home & assisted living is better than nothing at all.



Also, nursing home claims account for only around 30% of ltci claims. So assuming $1k in SS and income from assets, $3k/m is fully insuring yourself for 70% of the risk. And it is 50% insured against the remaining 30% of the risk. (obviously some states are higher than others, you would need to kick it up to $4k in WA)


And just like any case you make notes, fully disclose facts, show the need & if they cant afford it then an alternative, document it all, and you are fine.

 

[LGilmore]

Now I know you're being pissy because of that other forum, but you've missed the point.

if the clients need is $1mill but they can only afford $500K??


In your example you've done a needs analysis together and came to the professional conclusion that the prospect needs 1 million. You've put that to paper and presented it. He decides on $500k, do you discard the work you've done that states he needs a million or do you put it in his file? with his initials on it?

Same applies for DI, show max benefit and then work with what works for the client, but you show max benefit and have them sign off that they've seen it.

So when you go back to my post and re read it, what do I suggest if you're going with 3k a month when the current cost is 8k per month?

And please think of that other place as Vegas, what goes on there, stays there.

and yes, I do see a big risk in underselling the costs. Even in your example you came up with a need first, before settling on a lower amount. You did not simply come up with a number and a sale.

And we're talking elder care here. You undersell coverage and they complain and you have no documentation that shows they knew they were under buying a benefit, what do you think the OIC will do to you as well as a prosecutor?

Just submitted a LTC app and about 12 pages simply dealt with the acknowledgement of the applicant that premiums could rise in the future. No questions at all, just a listing of all previous LTC plans they sold and the cost increases incurred and just the statement they had to sign off on that they UNDERSTAND that premiums can increase after 3 years. Why do you think that is there?

 

[scagnt83]

Now I know you're being pissy because of that other forum, but you've missed the point.

Larry, you should know me better than that. My post had nothing to do with the other forum. And I did not realize that I was being pissy.


Your point was that $3k/m is not a lot considering the possible cost of Nursing Home Care. Your other point is that leading a presentation with a benefit lower than the actual need could be a liability for an agent.


My question in bold was not me being an ass, it was me making a point; LTCI is really no different than any other form of insurance.
The client has a certain need, and the client has a certain means to pay. As an agent you try to find the best benefit for the means available.


You asked in your original post if $3k/m is a realistic benefit to present. I was simply explaining how realistic it is. (in most states, it fully covers around 70% of the risk, and it halfway covers 30% of the risk) (assuming at least $1k in ss/retirement income... which anyone buying LTCI would have)


But you are making it seem like I would lead with the $3k/m number. The way $3k/m came into the conversation is because the OP already had premium limitations on the case..... we already knew the means... so there was no point in giving the OP an example with $8k/m because his client could never afford it....

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So when you go back to my post and re read it, what do I suggest if you're going with 3k a month when the current cost is 8k per month?

You didnt post anything in your original post related to that situation from what I can see. Not sure what your point is here.

You asked where in the US home health or nursing care costs $3k/m. Then you asked if $3k/m was a realistic benefit to present.

I simply tried to answer that question.

In many states for many people $3k will cover home care if you include current income that would be used towards the cost of care. And it would cover around 40%-50% of nursing care. (if the clients entire income is needed by a spouse to cover expenses then $3k will fall short)

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And please think of that other place as Vegas, what goes on there, stays there.

Larry Ive posted in that section many times in the past and it has never crept over to this side of things. If I was curt in my reply to your questions I apologize. But honestly I could care less about anything said on the other forum. I gave it another try after not posting there for a long while. But as usual nobody there is interested in actual conversation... its all just shouting from soapboxes with fingers in ears. I never responded to your last post because I just stopped posting in that section, it was nothing personal.


But on a positive note it is good to see you posting on this side of the forum. Arguing with brick walls is never a productive activity. Especially for someone with your industry knowledge.